Impact of the Global Recession on Members of the Self-Employed Women’s Association (SEWA) of India

Recession has hit the entire world. Wherever we go everybody is talking about it and each and every trade is affected by it. Recession is like a disease, how then can these workers remain unaffected by it?

Ranjanben Ashokbhai Parmar is an old member of SEWA. When I visited her house recently, she started to cry: “Who sent this recession! Why did they send it?” I was actually speechless. Her situation is very bad, her husband is sick, she has 5 children, they stay in a rented house, she has to spend on the treatment of her husband and she is the main earner in the family. When she goes to collect scrap she takes her little daughter along, while her husband sits at home and makes bundles of wooden ice-cream spoons, from which he can earn not more than 10 rupees a day. How can they make ends meet? 

Manali Shah
SEWA Union
February 2009

In early 2009, the Self-Employed Women’s Association (SEWA) of India, one of the partners in the Inclusive Cities project, conducted a study to assess the impact of the global recession on its membership.

Waste Recycling

The waste recycling sector was first sector in which a marked drop in demand and prices was observed. It is estimated that 1-2 per cent of the urban population of the world lives off collecting and recycling paper, cardboard, plastic, glass, and metal waste. Many of the waste pickers who do the primary collection and sorting earn very little: many of them are women and children. There was a significant downturn in the market and prices for recyclable waste around the world, beginning in September or October 2008. An article in the New York Times dated December 7, 2008 highlighted the situation with the declaration “Trash has crashed.”

The major cause for this dramatic downturn was the drop in demand from Asia, especially China, for raw materials and packing materials. The drop in demand for manufactured goods from developed countries led to a decline in exports of manufactured goods from developing countries which, in turn, led to a decline in demand for recycled waste materials and a drop in the selling price of waste. The net result was that tons of waste materials accumulated on streets or in warehouses, container loads of waste were stockpiled at harbours. More and more waste went directly to landfills and incinerators without being sorted for what could be recycled. And large numbers of waste pickers around the world earned significantly less or faced loss of livelihoods.

Here are figures supplied by the Self-Employed Women’s Association (SEWA) of India on the drop in prices of different types of waste between October 2008 and January 2009.

  Type of Waste Price - Indian Rupees
Oct 2008 Jan 2009
1. Steel/Iron
  nuts, bolts, screws 25 15
  sheet metal 10 5
2. Hard Plastic
  grade 1 15 6-8
  grade 2 13 3-4
  grade 3 10 3-4
3. Plastic Bags    
  grade 1 18 6
  grade 2 8 5-6
  grade 3 5 3
4. Paper
  newspaper 8 4
  brown paper 3 2
5. Cloth
  white cloth 20 12
  clean cloth 6 3

 

Export Manufacturing

The financial crisis, and the decreased incomes and increased uncertainties associated with it, resulted in a major downturn in trade. The transmission mechanisms are quite clear: decreased incomes and increased uncertainties in the global North > decreased consumption which led to decreased demands for imports > major downturns in export manufacturing in countries around the world > massive lay-offs and/or restructuring of the workforce.

China, the “factory of the world,” experienced massive lay-offs in the garment, toys, and electronic sectors, especially in the Pearl River Delta region. But China was not the only country affected by the decreased demand from the global North for manufacturing goods. Most countries around the world, especially those that relied on exports, have felt the downturn in trade. In India, there were massive lay-offs in some sectors (diamond polishing) and less frequent and secure contracts in other sectors (textile/garments).

Much of the global workforce in export manufacturing is informal, including: wage workers without legal or social protection in factories and small workshops; industrial outworkers producing for export and being paid by the piece; and some self-employed producers. Factory and other wage workers lost jobs or had their contracts restructured (fewer hours and benefits, fixed term). Industrial outworkers received fewer or smaller work orders: some had existing orders cancelled or simply were not paid. Those who supply raw materials or accessories for export manufacturing also faced declining work orders or cancellation of existing orders.

Consider the example of industrial outworkers in the garment sector in Ahmedabad, India. According to figures provided by SEWA, between November 2008 and January 2009, garment outworkers experienced a decline in days of work and earnings, as follows:

November 2008 January 2009
100% - > 20 days of work 69% - >20 days of work
100% - earned >1000 rupees p.m. 50% - earned >1000 rupees p.m.

 

Construction

The construction industry was expected to experience a significant downturn over the next several years, even in countries that increased government spending on infrastructure. One dimension of this downturn has been the decline in remittances from migrant construction workers which, in turn, has led to a decline in the construction of private residences in sending countries. Between November 2008 and January 2009, women construction workers in Ahmedabad, India experienced a decline in days of work and earnings, as follows:

November 2008 January 2009
80% - >10 days of work 23% - no days of work
20% - <10 days of work 67% - < 10 days of work
125-150 rupees p.d. 90-120 rupees p.d.